In India, gift-giving drives drugmakers' marketing

A representative for a pharmaceutical company visits doctor Vinay Kulkarni (R) at his clinic in Pune August 27, 2012.

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Pictures of Hindu gods hang beside a medicines rack inside a clinic in Pune August 27, 2012. Picture taken August 27, 2012. To match Insight INDIA-PHARMA/KICKBACKS

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A representative for Abbott enters a doctor's clinic in Pune August 27, 2012.

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A medical representative (C) with Abbott talks to a chemist at a market in Pune August 27, 2012. Picture taken August 27, 2012.

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A representative for Abbott rides his bike to a doctor's clinic in Pune August 27, 2012.

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Vinay Kulkarni, a doctor, examines the eyes of a patient inside his clinic in Pune August 27, 2012.

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MUMBAI (Reuters) - Sales representatives for Abbott Laboratories Inc's Indian subsidiaries know what it takes to get a doctor to prescribe the drugs they market: a coffee maker, perhaps, or some cookware, or maybe a vacuum cleaner.

These are among the many gifts for doctors listed in an Abbott sales-strategy guide for the second quarter of 2011, a copy of which was reviewed by Reuters. As laid out explicitly in the guide, doctors who pledge to prescribe Abbott's branded drugs, or who've already prescribed certain amounts, can expect some of these items in return.

Consider the guide's entry for Nupod, an Abbott antibiotic generically known as cefpodoxime. It lists a medical textbook, a mosquito repellant and a coffee maker as incentives for doctors.

It also provides a script of the social niceties for clinching the quid pro quo: "Dr presenting you advanced coffee maker from Philips which will make coffee within three minutes. Dr in the box we have made advancement easy for you by giving the ideal usage guidelines of the coffee maker. Dr I look forward for advancement in action i.e. our Nupod brand. Dr can get just 3 Rx per day for Nupod."

Especially in India's poorer areas, says one Abbott rep, "if you give them a small gift, they are happy."

The Abbott guide -- reps say the company produces them regularly -- is evidence of a larger problem in India. In interviews with Reuters, dozens of doctors, drug reps and other healthcare insiders said domestic and multinational drug makers routinely shower Indian doctors with gifts, posh junkets abroad, and cash payments disguised as consultancy or other types of fees.

"Indian CRM," or customer-relationship management, is what industry insiders call this system of inducements. None of the doctors or reps who described their participation in this trade would speak on the record. Under Indian law, doctors are prohibited from accepting cash, gifts or travel from drug companies. Still, enforcement is rare, and drug makers may lavish gifts on doctors with impunity, though their home countries may punish the practice.

In a country where doctors often make less than $10,000 a year, it can be an effective strategy.

"Somebody is doing something for you," says a Delhi-based cardiologist. "Obviously you will want to return the favor." He says he prescribes more drugs from companies that provide gifts and send him on paid vacations to Thailand, Hong Kong and elsewhere. One of those companies, he says, is the India-based Ranbaxy unit of Japan's Daiichi Sankyo Co.

"We do not sponsor vacations for doctors," a Ranbaxy spokesperson said. "We are viewed as a scientifically and academically orientated company and our promotional activities are built around academics and science."

In response to questions from Reuters, Chicago-based Abbott said that it complies with local laws and regulations in India. It added that company policy forbids employees to "offer or give a sponsorship, gift, meal or entertainment in exchange for an explicit or implicit agreement that Abbott Products will be used, purchased, ordered, recommended or prescribed or that Abbott or any Abbott products will receive any favorable treatment."

SO MANY CHOICES

The Indian market is particularly vulnerable to corruption because of the intense competition here. Until 2005, India flouted drug patents, refusing to rein in domestic copycats of Big Pharma's blockbusters. Brands proliferated. Today, an Indian doctor can choose from among 224 registered brands of the cholesterol-lowering drug atorvastatin, sold by Pfizer Inc as Lipitor in the U.S. and elsewhere.

Foreign companies that want a piece of this crowded market "have to adapt, or they are not going to survive," says an executive with Biocon, a leading Indian biotech company. The executive says Biocon routinely gives doctors iPads, iPods, mobile phones, "you name it."

A Biocon spokesperson said the executive's statements are "incorrect and absolutely untrue" and added that the company operates "in strict compliance" with the law.

Public health experts and some Indian doctors say that as a result of drug companies' tactics, drugs are dangerously overprescribed and expensive brands are prescribed instead of cheap ones. That can be devastating for patients -- physically and financially -- in a country where health care is mostly private and unsubsidized and 400 million people live on less than $1.25 a day.

At the Amrita Clinic, a private practice in Pune, Maharashtra State, physician Vinay Kulkarni says he refuses to accept gifts from reps, in part because he believes drug makers overcharge for their products to recoup marketing expenses. "Ultimately," he says, "everything is being paid by the patient."

As Big Pharma has pushed into emerging markets like India in recent years, companies have been running into trouble with their home-market overseers. Many of the world's top drug makers have warned in recent regulatory filings of potential costs related to charges of corruption in foreign markets.

TEA SETS IN CHINA

Last year, Johnson & Johnson agreed to pay $70 million to settle U.S. charges that it paid bribes and kickbacks to win business in Greece, Iraq, Poland and Romania. Pfizer Inc recently agreed to pay $60.2 million to settle a U.S. government probe of the drug maker's use of illegal payments to win business overseas, including gifts such as cellphones and tea sets to doctors in China who prescribed the company's products.

Abbott became the No. 1 pharmaceuticals company in India in 2010, when it paid $3.7 billion for the branded generics business of Mumbai-based Piramal Healthcare. Its thousands-strong Indian sales force has helped buoy the parent, as sales in emerging markets rose 23 percent to $2.59 billion in the second quarter of 2011 -- more than twice Abbott's global growth rate.

Reps from Abbott True Care, Abbott Healthcare and Abbott Primary Care - all formerly part of Piramal and now subsidiaries of Abbott -- say sales plans are revealed to them at "cyclical sales meetings" every three or four months. These meetings, they say, sometimes include studying printed strategy guides like the one for second-quarter 2011 that Reuters reviewed.

That guide offers no clarity on why particular gifts are paired with particular drugs. None of the items that come with Nupod, the antibiotic, go to doctors who prescribe Pantagon IT. That drug - a combination of itopride, for bloating and indigestion, and the antacid pantoprazole - comes with a stapler, a set of six glasses and a jar from Luminarc, and a Forbes Trendy Nano vacuum cleaner.

"THE PANTA REWARDS INPUTS MUST ONLY BE PRESENTED AT THE DRS HOME," the guide tells reps. When delivering the glassware, reps are instructed to say, "Thus Dr requesting your continuous prescription support for Pantagon IT."

Prescriptions for Paraxin, a drug for typhoid fever, are rewarded with a hand sanitizer and an antique pen. Prescriptions for Lysupra, a multivitamin supplement, could earn a beaded car-seat cover "for the relaxation when you are traveling."

Depending on the drug, a doctor might find himself the owner of a Kiwi shoeshine kit, an Ambi Pur car air freshener, a Birla steam iron, or a Pure Relaxation CD series. And if that's not enough, participation in a "Doctor Talent Contest" judged by Bollywood actor Boman Irani might seal the deal.

SCANNERS AND STEAM IRONS

Abbott reps say that so far this year, they have doled out, among other things, scanners, steam irons, shoes, stethoscopes and gift vouchers worth more than $100 to doctors - both private and government-employed.

Amitava Guha, a member of the national working committee of the Federation of Medical and Sales Representatives' Associations of India, worked as a rep for decades, including for Piramal from 1997 to 2008, when he retired. "Everybody is doing it," he says. "I was doing it when I was in service.... They said that it is your job to go and give to the doctors."

He says he resisted giving anything but the smallest gifts, like pens. Today, he says, he receives frequent complaints from reps across the country about the practice. It taints their professional image, he says. Also, it's hard work toting around all those gifts. "They have been given huge extra bags to carry," he says. "One on the shoulders and two others in the hands."

The managing director of a large diabetes clinic in Calcutta says he sees as many as 25 reps a day. "Whatever you like, they can provide you," this doctor says.

His interview with Reuters was interrupted when a man squeezed into his office and placed a big yellow box on the table. "Sir, this is an exquisite casserole set," the visitor said, slipping the doctor a note bearing the brand name Rostar, a cholesterol-lowering medicine from Mumbai-based Unichem Laboratories Ltd.

Unichem did not respond to requests for comment.

Guha, the union federation official, says that reps have begun reporting a shift in emphasis away from the types of gifts listed in Abbott's guide toward free "foreign tours" and outright cash payments, often made under the guise of public health initiatives or research.

Every year, Abbott, collaborating with doctors and other groups, conducts hundreds of "health camps" across India to raise awareness about conditions such as diabetes, high cholesterol, anemia, breast cancer, sleep problems and thyroid disease.

Abbott says these programs "generally incorporate diagnosis, prevention and education. The focus of these camps is around disease and not products."

IN THE NAME OF SCIENCE

Reps say public health isn't always the point. "This is a business transaction," says one. This rep says that at a diabetes camp he worked on, patients were given random blood-sugar tests - not a valid means of diagnosing diabetes - and based on the result, were prescribed Abbott oral diabetes medications by the participating doctor.

Similarly, reps and doctors say companies try to boost sales through so-called non-interventional post-marketing studies, commonly used around the world to monitor the safety and efficacy of drugs after they have been approved for sale.

Doctors and reps say that often, companies use these studies as cover for paying doctors to prescribe the drugs under study. According to one Abbott rep, the company doesn't pay doctors if sales at nearby pharmacies don't increase.

A doctor who has done post-marketing studies in India says the companies rarely monitor the studies or check the data. "We all understand that post-marketing studies are not really true studies," says the doctor, a diabetes specialist at a Calcutta hospital. They're "just a way to offer an honorarium. So we also don't take them seriously."

(Editing by John Blanton)

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